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Public Accounting Firms and Billing

I received a new engagement letter from one of the larger semi-national firms. Besides the hold-harmless attestments they wanted me as the client to sign they added a new wrinkle, a 2% administrative fee above and beyond the rates. While I negotiated this out of the contract (I said no, period, end of story); I find this practice to be abhorrent. It would seem as if the firm has not responsibility for the costs of running the firm. What do you think?

Answers

Bob Farkas
Title: Consulting CFO
Company: Crestview Associates, LLC
LinkedIn Profile
(Consulting CFO, Crestview Associates, LLC) |

Yes, this cost would be included in "standard" bill rates. Sometimes clients beat down the standard fee through negotiation. Then, new things begin to arise (like the admin fee) as the accounting firms seek to improve the profitability of jobs. Maybe that is the case here?
In a different industry, that's why we all pay for baggage now. We beat down the standard airfare rates.

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

I agree wholeheartedly. I do see T&E as an add on, which I am ok with. I have always seen legal firms add on the costs for copies, etc...but recently the add on tends to be more vague and includes words like administrative costs like you mention. Service firms are looking for ways to boost revenue and unless you push back, these costs will go up.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

@ Farkas:

"We" didn't beat down the standard airfare. Competition did.

That's why competition is so healthy for our society. It provides the best margins for the end user and it causes capital in the market to go to where it is most efficiently utilized.

Having said that, I'm very old fashioned. I abhor multiple "fees". I'm purchasing a product or service. I don't want a mine field of tariffs, fees and multiples. Just charge me what you need to charge me to keep your business afloat. I'll take a straight up dealer over the fee charger any day. Even if I actually end up paying more.

There is a value to my not having to have a legal advisor or an analyst review every detail due to fees and abstract charges.

The "fee" thing has extended to the hotels now too! Well beyond the mini-bar.

Oy vey!

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